Australia, insurance, car, home, live, holidays

Sources said while deal talks were at an advanced stage there is no guarantee it will be completed. ANZ Banking Group has also been linked in media reports with a bid for the company.

“It’s not 100 per cent a done deal. These things take time of course,” said one source briefed on the situation who could not speak publicly because the talks are confidential. “Banks are somewhat more complicated than normal proprietary limited companies. But it’s pretty much,it’s very close to a done deal.”

Another source from a smaller fund,who could not be identified because they had signed a confidentiality agreement,said they had been asked to sell their shares to BoQ. “It wasn’t our initiative,” the source said. “It’s the board that has made a decision about the future. It’s pretty hard to be competitive with the big banks.”

A third source who could not be named because they are not authorised to speak publicly,said there was disagreement between the bank’s shareholders around whether to sell the asset,with smaller funds wanting to retain it and larger funds pushing to divest.

“The split was between larger and smaller,” the source said. “AusSuper has always been a bit determinative where they go and they’re the ones giving the nudge.”

“The smaller funds have been keen to hold onto it,maybe because of the history.”

“I’m actually quite angry about it,” one of the sources said. “Some of these people don’t seem to share the vision I suppose of actually building collective financial institutions.”

“The difficulty here is if you don’t get scale,you can’t pay for the online platform that you need to have a consumer interface you’re happy with.”

Super fund giant AustralianSuper has been leading the push to divest ME Bank in part due to concerns the boutique lender had become more hassle than it is worth. “The amount of scrutiny this asset has got and the amount of money spent on reviews and legal advice is just insane.”

Industry Super Australia chair Greg Combet has been working as an adviser to ME Bank’s board,closely monitoring negotiations with chair Jim Evans. He could not comment on the deal due to confidentiality agreements that had been signed.

Evans and Partners managing director Matt Wilson said an acquisition would increase BoQ’s loan book by 56 per cent,adding BoQ may have to launch a capital raise of $1.2 billion to merge the entities. “M&A is notoriously challenging and disruptive for the acquirer,” he said.

ME Bank appointed Adam Crane as chief executive in August last year,taking over from Jamie McPhee who had been in the role for more than a decade.

The executive shake-up came afterThe AgeandSydney Morning Herald revealed changes to the bank’s mortgage redraw policy had left thousands of customers without access to cash amid the height of the pandemic.

The reporting ultimately forced a reversal of that policy, but manycustomers told this masthead they had lost faith in the bank’s management.

ME Bank is owned by a suite of larger industry super funds including HESTA,Cbus,Hostplus,Unisuper,AustralianSuper and smaller funds including NGS Super,TWU Super and First Super.

BoQ,ME Bank,AustralianSuper and ANZ declined to comment.

Business Briefing

Start the day with major stories,exclusive coverage and expert opinion from our leading business journalists delivered to your inbox. Sign up for theHerald's here andThe Age's here.

License this article